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September 18, 2012

Playing to Win Still Matters in Football, the Markets and the Economy

Alabama Coach Nick Saban, far left, and team visiting President Obama at the White House in April. (Photo: AP)

Has anyone noticed the fantastic few weeks of college football we’ve had so far this year? If you haven’t, you must not live in the South or have the pleasure of experiencing SEC football, or better yet, Alabama football.

With a mounting total of 14 national championships, the University of Alabama’s football history is like no other program, especially in the last three years. The school, coaches and players have shown their continuous desire for achieving maximum success on the field, to be sure. I find it interesting how the spirit of athletic competition can teach us a number of lessons as they relate to success in our country. I hope you’ll indulge my passion for Alabama football (ROLL TIDE ROLL!) and the parallels to our nation’s future, although the same points would be true with any top program.

Like football teams, we know that investors and most people play to win. Yet does it sometimes feel that our politicians are not playing to win? Is government policy indirectly enabling people, promoting a mindset of socialism? It seems, as a nation, we are slowly evolving into a culture where everyone is entitled to endless prosperity, all at the cost of people who have earned their success. Government policy seems to be driving our nation towards a “losing” mentality by giving a place in the lineup to many who have no drive or ambition and haven’t trained or practiced. Eventually, we’ll end up fielding a losing team.

I illustrated this idea in a previous article for AdvisorOne, Financial Freedom Is Not Free, which you may like to review. By increasing taxes on hard-working people, burdening them with additional regulation, and expecting them to subsidize more social services, it discourages self-responsibility and financial discipline.

This concept of entitlement and enabling has even led to some youth league programs across the country choosing not to keep score in sporting events, for fear of damaging kids’ emotions or self-esteem. The idea being that everyone’s a winner and no one ever loses. Is this really the foundation for our country’s spirit of success? Is this even reality?

We keep score because winning and losing matter, although our approach must be tempered with good sportsmanship and fairness. It’s the basis for building a stronger America. No one likes to lose, but it’s a daily reality in life. Do you think winning and losing has mattered to Alabama football players, coaches and fans over its 100+ year history?

While winning and losing is the bottom line in the economic world, it’s the score that dictates our level of success. Does it matter that Apple has become the largest publicly traded company, or that Microsoft dominates computer operating systems? Why do you think you can travel anywhere and find a Wal-Mart or McDonald’s nearby? Obviously, the shareholders of these companies thought the score mattered when it came time to buy or not buy the company’s stock. Otherwise, why do we keep track of the DJIA, S&P 500, the Russell’s, the Barclay Aggregate Bond Indexes or the MSCI? Don’t services such as Morningstar rank mutual funds and ETFs, expenses, strategies, etc., daily? As advisors, don’t your clients care about their portfolio returns relative to the market?

My point is – like it or not – keeping score relates to almost everything in life. Your education, career growth, salary, bonus, the size of your house, the number of cars you own, how much you donate to charity and more – is all measured through some scoring analysis. So it’s ludicrous to think that keeping score doesn’t have a foundation in our economically based society. Do Coach Nick Saban and Alabama football care about the score in each game? Of course, because the score illustrates how well both the offense and defense executed their strategy during the game.

However, with football just as with the market, past performance is not a predictor of future results. The Alabama football team won 11 national championships by the end of 1979, acquiring their 12th in 1992, with numbers 13 and 14 coming more recently. Yet if they sat back and relied on history to dictate their future, they would probably still be reminiscing about the last championship won in 1979! As a country and society, we are no different. While it’s important to record who wins the White House or who trades places in Congress come November, those scores won’t guarantee our destiny. While Alabama has 14 titles, they still play every Saturday to keep building on their achievements.

The question is what are you and I going to do over the next 20 to 30 years to help determine if we dominate the next 100 years of economic history? When we look at our nation’s past, we see the rise to prosperity and our hard-fought advancement to become the global economic leader. For near-term and future success, it’s time our government recalibrates its mindset to help people win by giving them a hand up, not a hand out.